Morgan Stanley

E*TRADE from Morgan Stanley Study Reveals Education Costs Are a Leading Reason Young Investors Dip Into Retirement Savings

Jun 30, 2022

Millennial and Gen Z investors cite education costs as one of the top barriers to retirement

Arlington, Virginia -

E*TRADE from Morgan Stanley today announced results from the most recent wave of StreetWise, its quarterly tracking study of experienced investors. As graduation season comes to a close, results show the impact education costs have on investors just embarking on their investment journeys:

  • Young investors are withdrawing early to pay for education. Of the nearly half (49%) of investors under the age of 34 that said they have withdrawn from an IRA or 401(k) early, 20% said it was to pay for an education, followed closely by a medical emergency (19%).
  • Education costs loom large. Nearly two in three (63%) young investors said education costs or paying down student loans are barriers to saving for retirement.
  • They are looking for a lifeline. Over two in five (41%) young investors said education reimbursement was one of the top three benefits an employer could provide beyond traditional health insurance.

“The rise of education costs has been a pervasive challenge, so it’s no surprise to see the toll it has taken on young investors,” Mike Loewengart, Managing Director of Investment Strategy at E*TRADE from Morgan Stanley. “While drawing down on retirement savings may be tempting when you have a long runway to retirement, young investors lose out on the power of compounding. Further, early withdrawals can come along with penalties, so understanding the magnitude of the decision is critical.”

Mr. Loewengart offered additional investing and saving considerations for recent grads:

  • Focus on savings first. Building an emergency fund—3 to 6 months of living expenses as a good rule of thumb—is a great first step and can provide short- and long-term financial assistance. Once a safety net is created, consider paying down high-interest debt before creating a portfolio.
  • Lean on employee benefits. Prioritizing finances on top of beginning a new career can be difficult, but many employers provide benefits and tools to help ease the burden. Student loan repayment and education reimbursement offerings can help with education expenses, while employer matches to retirement contributions and financial coaching tools can better prepare you for a strong financial future.
  • Put your investing on autopilot. Once young investors have a handle on their debt, automatic investing may help them build their portfolios. The strategy allows investors to set up recurring investments on a schedule that works for them. Automatic investing may also help reduce risk through dollar-cost averaging by taking advantage of the natural ups and downs of the market.1

About the Survey

This wave of the survey was conducted from April 1 to April 11 of 2022 among an online US sample of 913 self-directed active investors who manage at least $10,000 in an online brokerage account. The survey has a margin of error of ±3.20 percent at the 95 percent confidence level. It was fielded and administered by Dynata. The panel is broken into thirds of active (trade more than once a week), swing (trade less than once a week but more than once a month), and passive (trade less than once a month). The panel is 60% male and 40% female, with an even distribution across online brokerages, geographic regions, and age bands. The <34 (Gen Z and Millennial) data set comprises 269 investors between the ages of 18 and 34.

About E*TRADE from Morgan Stanley and Important Notices

E*TRADE from Morgan Stanley provides financial services to retail customers. Securities products and services offered by E*TRADE Securities LLC, Member SIPC. Investment advisory services offered by E*TRADE Capital Management, LLC, a Registered Investment Adviser. Commodity futures and options on futures products and services offered by E*TRADE Futures LLC, Member NFA. Banking products and services are offered by Morgan Stanley Private Bank, National Association, Member FDIC. All are separate but affiliated subsidiaries of Morgan Stanley. More information is available at

  1. Automatic Investing and dollar-cost averaging do not ensure a profit or protect against loss in declining markets. Investors should consider their financial ability to continue their purchases through periods of low price levels.

The information provided herein is for general informational purposes only and should not be considered investment advice. Past performance does not guarantee future results.

E*TRADE from Morgan Stanley, E*TRADE, and the E*TRADE logo are trademarks or registered trademarks of E*TRADE from Morgan Stanley. ETFC-G


© 2022 E*TRADE from Morgan Stanley. All rights reserved.

E*TRADE engages Dynata to program, field, and tabulate the study. Dynata provides digital research data and has locations in the Americas, Europe, the Middle East and Asia-Pacific. For more information, please go to

Have you ever taken out money from an IRA or 401(k) before the age of 59.5 and, if so, for what?


Age <34



Yes (net)


Yes, to pay for education


Yes, for a medical emergency


Yes, to make a large purchase


Yes, because I became unemployed


Yes, to simply spend on myself or my family


Yes, to spend on a vacation


Yes, for holiday expenses


Yes, Other


When it comes to your personal ability to save for retirement, how much of a barrier is each of the following?


Age <34



Healthcare costs


Education costs or paying down student loans


Living expenses like food or utilities


Rent or mortgage


Wanting to live for today


Retail shopping and/or eating at restaurants




Pet care


Having a parent live with you


Having an older child live with you


Which of the following benefits that a potential employer could provide would be the most important to you, beyond traditional offerings like health insurance? (Top 3)


Age <34



Retirement plans


Insurance other than health (e.g., life, legal, and auto)


Education reimbursement


In-office or digital financial wellness seminars


Student loan refinancing


Commuter benefits


Gym discounts


Product discounts


“Young investors” defined as age 18–34


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